Targeted Scenario Analysis

The Role of Targeted Scenario Analysis in Advancing an Economic Green Recovery and Sustainable Sectoral Development Policy

 

UNDP developed Targeted Scenario Analysis (TSA) as a response to growing demand from decision makers and stakeholders for more policy-relevant sustainable development analysis to support national Sustainable Development Goals. Confronted with diverse policy, management and investment choices, decision makers often cannot determine how different options affect the multiple economic, environmental and social objectives that decision makers want to achieve.

TSA is an innovative approach that provides focused direction towards specific sustainable development policy and investment choices for public or private sector actors. It captures and presents the value and the contribution of ecosystem services to sectorial development within a decision-making framework, thereby helping make the business case for sustainable policy and investment choices.

As the name suggests, Targeted Scenario Analysis has three pillars:

Targeted: Within a participatory process, TSA helps decision makers and stakeholders target a critical decision to be made at a policy or management level, which involves a change on how ecosystem service(s) ara managed, and improvements in sustainable development outcomes. TSA targets management and/or investment policies, both public and private.

Scenario: It does this by developing and contrasting two future scenarios – Business as Usual vs. Sustainable Ecosystem Management – that link changes to biophysical and socio-economic indicators as the scenarios develop.

Analysis: It presents an analysis of selected sustainable development indicators into the future. Decision makers select the priority and relevance of these, e.g. changes in soil fertility or water availability, changes in natural resources-based productivity, costs, net revenues, jobs, and equity and gender indicators.

The product of a TSA is a balanced presentation of evidence, for a decision maker, that weighs up the pros and cons of continuing with business as usual (BAU) or following a sustainable development path in which ecosystems are more effectively managed. This alternate path is termed sustainable ecosystem management (SEM). 

Context and Challenges

Advancing sustainable public sector policy in high-profile productive sectors is at the core of achieving the renewed COP-26 commitments to a greener post-COVID19 economic reconstruction, tackle climate change, and restore nature. It is a major political challenge for politicians and decision-makers who maneuver within a short-term political planning horizon.  Unfortunately, nature's impressive resilience and complexity has provided ample space to follow a "business as usual (BAU)" path of unsustainable nature degrading policies over decades. Lack of economic data to demonstrate the economic losses associated with the BAU path from the monetary and natural capital perspectives promotes unaccountability for unsound decision-making.

Understanding the reasons for the distancing between policy's objectives and sustainability objectives is critical to improving decision-making and advancing policy reform. UNDP’s Targeted   Scenario   Analysis (TSA) offers an analytical approach to generate focused evidence on the value of ecosystem services for specific sectors and for concrete policies.

In brief, TSA:

  • Makes a direct comparison between two policy scenarios, a business-as-usual (BAU) scenario in which unsustainable management and investment policies are projected into the future, and a so-called sustainable ecosystem management (SEM) scenario, in which improvements in the management of ecosystem and natural resources are introduced into sector development policy and investment.
  • A key element of a TSA is that it is conducted for a particular productive sector and with a specific public or private decision maker in mind.
  • Captures change across a wide range of indicators, not NPV alone, that are carefully selected in close consultation with the decision-maker (the TSA client).
  • Is focused on a specific decision maker, thereby increasing the likelihood that TSA results translate into more effective decisions and improved sustainable management of ecosystems and ecosystem services.
  • Differs from traditional economic valuation or cost benefit analysis, in that it avoids generating a policy-isolated, single static value.
  • Generates a package of policy recommendations supported by economic evidence on key monetary and non-monetary indicators. Each recommendation includes a narrative that clearly states who the main stakeholder is for the analysis, an in-depth description of the methods, assumptions and data sources used to generate the results, as well as the levels of confidence and uncertainty associated. Apart from explaining the results depicted in the graphs there is a clean indication of what those results mean in terms of policy decisions.

Since the publication of the TSA Guideline in 2013, TSA reports have been generated in over ten countries, covering both renewable (e.g., agriculture, livestock, fisheries) and non-renewable (e.g., small scale mining) resources.  Table 1 below shows a list of the completed and ongoing TSA (by country and sector).

Table 1: Targeted Scenario Analysis

Completed TSA 2019-2021

Country

Sector

Colombia

Deforestation-free livestock/conservation of jaguar habitat

Costa Rica

Sustainable pineapple production

Ecuador

Phasing out mercury in artisanal and small-scale Mining

Guatemala

Sustainable fisheries

Indonesia

Sustainable forest management and deforestation-free commodities

Kazakhstan

Sustainable forestry/Forest management

Liberia

High value conservation forest and deforestation-free palm oil

Mongolia

Conservation of Ecosystems in Protected areas and sustainable use of natural resources in multiple productive sectors

Paraguay

Deforestation-free livestock and high value conservation forest

Peru

Deforestation-free cacao

Peru

Deforestation-free palm oil

Thailand

Finance to combat and eliminate Illegal Wildlife Trade

In progress

Country

Sector

Colombia

Small scale mining

Cuba (5 TSA)

Deforestation-free agriculture; Sustainable tourism; Protected Areas; Costal Management-Climate Chance; Non-renewable Energy; and sustainable fisheries.

Indonesia (5 TSA)

Sustainable agriculture – Palm oil

Dominica Rep.

Deforestation-free agriculture (Coffee) and sustainable tourism

Mexico

Sustainable tourism

Peru

Deforestation-free livestock

Peru

Sustainable agriculture - Coffee Sector

Suriname

Phasing out mercury in small-scale gold mining

   

 

 

For further information:

Marlon Flores, UNDP Senior Technical Advisor on Targeted Scenario Analysis:

marlon.flores@undp.org

TSA Success Stories From Around the World

 

©Nicolas Petit, UNDP GCP.

 

Currently, the UNDP Green Commodities Programme, UNDP-GEF and PAGE are supporting TSA studies in different sectors, for instance: several TSA in Cuba including key sectors such as human settlements, tourism, fisheries, agriculture and protected areas; forest/cattle farming in Colombia; artesian and small scale mining in Ecuador; cocoa in Peru; forest/cattle farming in Paraguay; forest/forestry in Liberia; illegal wildlife trade in Thailand, and forest/palm oil in Indonesia. A wide range of new TSAs are being planned and designed for 2020.

In Guatemala, the results of Targeted Scenario Analysis demonstrated that under conditions of “sustainable use” and by the year 2025: capture fisheries benefits increase more than 10-fold; tourism benefits are more than GTQ 200 Million, and aquaculture's per hectare per year income – in contrast to Business as Usual – reaches a massive $40,000 more. The UNDP’s Flor Bolanos says that “The Guatemala case demonstrates how strategic advocacy can positively impact on a number of coastal and marine management initiatives: it has helped fill a critical community fishing data gap; introduced participatory strategies for sustainable use and management; sprung a programme for the prevention, reduction and control of pollution from land-based sources in Marine Protected Areas; among other changes”.

UNDP’s Kifa Sasa said that “In Costa Rica, the TSA analyzed the benefits of sustainable pineapple production and led to the development, endorsement and implementation of the Pineapple Action Plan through 4 Ministries. The TSA determined that, over the course of 5 years, implementing the Action Plan would cost approximately US$6.5 million while the increase in benefits could be valued at US$15 million”.

In Mongolia, Dr. Ganzorig Gonchigsumlaa, co-author of a TSA study on protected areas, states “the TSA demonstrated its value as an effective tool for advocating for both immediate and longer-term changes by the Minister of Environment. The study helped to secure the existing funding for protected areas, based on the valuation of the ecosystem services they provide, and enabled the creation of a fund for the long term”.

 

Ecuador – Artesian and small-scale mining

In Ecuador, nearly 100,000 people directly depend on Artisanal and Small-Scale Gold Mining (ASGM). Gold is the main export mineral, and ASGM produces at least 85% of Ecuadorian gold, which corresponds to more than USD 300,000,000 in annual income. Despite this importance, the sector lacks access to financing, which produces technological inefficiencies, and the persistent pollution from the use of mercury represents a cost of at least USD 80,000,000 per year. Read Ecuador´s Completed TSA and Policy Brief.   

 

Kazakhstan – forestry/forest

To  support the achievement of the goals set by the Government of Kazakhstan to increased forest cover,  UNDP  commissioned  Wolfs Company and the VU University Amsterdam to perform a Targeted Scenario Analysis (TSA) for the Ministry of Ecology, Geology and Natural Resources (MEGNR) of the Republic of Kazakhstan.

The TSA  assesses  the  impact  of  two  forest  management  scenarios  that  have  been  identified  in  consultation with stakeholders in Kazakhstan:

1.     The Business-As-Usual scenario (BAU), in which current management practices are continued and historical trends in forest cover continue.

2.     The Sustainable Ecosystem Management (SEM) scenario, in which investments are made to improve  forest  management  and  reach  the  forest  cover  target  of  5%  of  the  surface  of  Kazakhstan by 2030. Read Kazakhstan´s Completed TSA and Policy Brief.

Liberia - High value conservation forest/palm oil

The Government of Liberia has prioritized the development of agroforestry concessions, and interest from global companies confirms palm oil as a significant economic opportunity for the country; they have already invested on the order of US$500 million since 2008. Communities and smallholder producers in and around allocated concessions are eager for concessions to proceed, as employers and purchasers as well as funding sources for socioeconomic benefits such as improved roads and schools. Nevertheless, development of the oil palm sector has stalled.

This study compares economic gains and losses from different possible oil palm development paths in Liberia using Targeted Scenario Analysis (TSA). The UNDP developed the TSA methodology to help decision makers incorporate the value of ecosystem services into public policy. This methodology involves five principal steps. Read Liberia´s Completed TSA and Policy Brief.

 

© UNDP, Paraguay

 

Paraguay - Livestock/high value conservation forest

Livestock plays an important role in the Paraguayan economy. In the last 5 years, livestock has contributed almost 10% of GDP, employed around 300,000 people and meat exports have injected an average of 1,100 million dollars annually (MF Economía, 2020). The Chaco region supports 47% of Paraguayan livestock and in turn is an ecosystem of national, regional and global importance due to its biodiversity and natural forests.

However, the growth of the sector is characterized by horizontal expansion and the change of land use to enable new productive plots. In total, it is estimated that only in the western region of the Chaco pastures went from covering six million hectares in 1991 to more than ten million in 2008 (PNC ONU-REDD + Py / SEAM / INFONA / FAPI, 2016). Since then there has been a continuous growth of the sector. To face these challenges, Paraguay has a set of policies and legal instruments related mainly to environmental aspects, such as Forestry Law 422/73 and Law 294/93 on Environmental Impact Assessment, among others. At the same time, many producers state that these laws are rigid and excessively bureaucratic and that they put the economic and environmental sustainability of the sector at risk. Read Paraguay´s Completed TSA and Policy Brief.

Peru – Cacao/palm oil

The Cacao and the Palm Oil TSA study compares the financial, economic and environmental effects of continuing with current practices in cocoa production and oil palm production, versus the adoption of alternative practices, which can generate higher profitability and at the same time are more environmentally sustainable. The main premise for the definition of alternative practices is to satisfy the demand levels projected to 2030 by reducing the pressure on forest ecosystems. To do this, the study analyzes the effects of increasing productive yields with an adjustment in technological management that allows cultivation on degraded lands. Read Peru´s Completed TSA Cacao (EN) (ES), Completed TSA Palm Oil and Policy Brief for both Cacao and Palm Oil.

Colombia – Livestock

Deforestation in the Amazon region presents great challenges for Colombia. As these valuable forest resources are lost, the connectivity of the landscape, the quality of its natural waters, biodiversity, soil fertility, the sequestration of greenhouse gases (GHG) are lost, among many other ecosystem services that characterize the region. Taking into account the regulatory and land use planning frameworks that are being developed for Colombian livestock and the goals and commitments that the country has proposed to reduce its greenhouse gas emissions and conserve protected areas, this study focuses on generating economic information to recommend concrete actions towards a more sustainable livestock in the region that converge with the reduction of deforestation in these valuable ecosystems. Read Colombia’s Completed TSA (ES) and Policy Brief (ES). 

Thailand – Illegal Wildlife Trade

Wildlife crime is now considered to be at crisis level - driving biodiversity loss and imposing far-reaching impacts on livelihoods, economies and regional security. It is globally the fourth most lucrative type of transnational crime generating illegal revenue estimated at USD 5 billion to USD 23 billion per annum in 2017. Thailand is a source, transit and destination country for many different types of illegally-traded wildlife and wildlife products. Illegal international trades are mostly of exotic species such as rhino horn, elephant ivory and pangolin. This study aims to improve the decision makers’ awareness of the social, economic and environmental economic losses deriving from the IWT to Thailand and globally and the benefits associated with a reductio/elimination in wildlife trafficking. Read Thailand’s Completed TSA and Policy Brief

For more information on TSA, contact Marlon Flores at marlon.flores@undp.org or Usman Iftikar at usman.iftikar@undp.org.